Do farm labor contractors qualify for the ACA’s seasonal employer exemption?

The short answer is most likely no.

The long answer is this:

The Affordable Care Act (ACA) define a “large employer” as any employer that employs on average, 50 or more employees per month.  Large employers fall under the requirement to provide affordable health insurance coverage to their employees.  If they don’t, then they are subject to the law’s penalties.

There is an exception however, for employers that employ seasonal workers.  The problem is that the definition for seasonal employers does not fit most farm labor contractors.  Instead, it was designed for other types of seasonal employers, for instance employers in vacation hot spots that may have a surge of employees during the vacation season, but that don’t employ many workers during the rest of the year (for example, a ski resort).

So what is the requirement to be exempted from the “large employer” definition?  Your company may exceed the 49 employee limit but:

  1. All employees over 49 must be “seasonal workers”.
  2. Your business cannot exceed the 49 employee limit for more than 120 days in the year.

To apply this test, you must add up all workers on each day of the year, counting the total of seasonal and non-seasonal employees on each day, to make sure that you don’t average more than 49 non-seasonal employees.  You must also count up the number of days that your workforce exceeds the 49 employee limit.  This means that it is important to know not just how many days employees worked, but which days they actually worked on.

The ACA Full Time Employee Count Report, available on the Payroll->Reports menu, performs this analysis for you–provided that your payroll data has been entered with enough detail for it to do the analysis!

The good news is that agricultural workers, by nature of the work that they are performing, are automatically considered seasonal workers.

The bad news is that most farm labor contractors employ their workforce for a lot more than 120 days.  For instance, many labor contractors provide workers for different commodities that come into season at different times of the year, meaning they employ too many workers for too many days out of the year to qualify for the seasonal employer exception.

Recently, another delay in implementing the employer mandate was announced.  (The first delay was announced in July 2013, postponing the start of the requirement for large employers to provide affordable health insurance coverage from January 2014 to January 2015.

The latest delay postpones the requirement to provide affordable health insurance coverage from January 2015 to January 2016, but only for companies that employ on average 50-99 employees per month.  

This is likely to have little effect on farm labor contractors, who typically employ more than 99 workers on average.  For employers that average more than 99 employees, the mandate to provide affordable health insurance coverage will still go into effect on January 1, 2015.

The latest version of the program does include a setting on the Full Time Employee Count Report to change the limit from 49 to 99 for the 2014 payroll year, so if you think you might qualify for this exception, you can run the report to make sure.  This change was first added in version 6.83.756.  If you have an older version, use the Tools->Check for Updates option to update to the latest version.

One other important thing to keep in mind when running the Full Time Employee Count Report:  you may run the report for a period of less than a year, but if you do, you will need to change the Max Days >49(99) Workers setting to reflect your shorter time period.  For instance, if you run the report for six months, you should change the number of days from 120 (full year) to 60 (six months).

The mandate is sometimes referred to as a “play or pay” law.  You don’t have to provide health insurance for your employees.  But if you don’t, you will pay a penalty.  That will be the topic of the next post on the ACA.

Subscribe to Blog via Email

Stay up-to-date on program updates, quarterly/year-end accounting, and more.

Enter your information below and don't forget to confirm your email!

Recent Posts

Subscribe to Blog via Email

Stay up-to-date on program updates, quarterly/year-end accounting, and more.

Enter your information below and don't forget to confirm your email!